IMANET Exam CMA Topic 5 Question 107 Discussion

Actual exam question for IMANET's CMA exam

Question #: 107
Topic #: 5

[All CMA Questions]

Copeland Inc. produces X-547 in a joint manufacturing process. The company is studying whether to sell X-547 at the split-off point or upgrade the product to become Xylene. The

following information has been gathered:

I . Selling price per pound of X-547

II . Variable manufacturing costs of upgrade process

Ill . Avoidable fixed costs of upgrade process

IV . Selling price per pound of Xylene

V . Joint manufacturing costs to produce X-547

Which items should be reviewed when making the upgrade decision?

AI, II, and IV only.

BI, II, Ill, and IV only.

CI, II, IV, and V only.

DII and Ill only.

Show Suggested Answer

Suggested Answer: B

If the 8% return exactly equals the present value of the future flows ., NPV is zero), then simply determine the present value of the future inflows. Thus, Hopkins Company's initial cash outlay is $19,090 [($2,500)(PVIFA at 8% for 10 periods) + ($5J00)(PVlF at 8% for 10 periods ($2,500)(6.710) + ($5,000)(.463)].

by Dong at Feb 08, 2025, 05:08 PM

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Lizette

1 months ago

Haha, upgrade decision? More like a 'downgrade' decision if you ask me. Who wants to be stuck making Xylene when you could be producing the much cooler sounding X-547?

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Norah

1 months ago

Hmm, I'm leaning towards C. The joint manufacturing costs to produce X-547 could have a significant impact on the upgrade decision. We can't ignore that information.

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Lelia

1 days ago

Agreed, those are all important factors to review. It's crucial to have a comprehensive understanding before making the upgrade decision.

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Caprice

2 days ago

Definitely, it's crucial to take all those items into account to make an informed decision about whether to sell X-547 at the split-off point or upgrade it to become Xylene.

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Val

4 days ago

I think C is the best option. We need to consider the selling price of X-547, variable manufacturing costs, selling price of Xylene, and joint manufacturing costs.

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Denae

5 days ago

I agree, those are all important factors to review. We can't overlook any of them when making the upgrade decision.

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Dewitt

7 days ago

I think C is the best option. We need to consider the selling price of X-547, variable manufacturing costs of the upgrade process, selling price of Xylene, and joint manufacturing costs to produce X-547.

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Yvonne

2 months ago

I'm not so sure. What about V, the joint manufacturing costs? Shouldn't that be factored in as well? This seems like a tricky decision with a lot of moving parts.

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Iola

1 months ago

I agree. It's important to take all factors into account before making a decision.

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Audrie

1 months ago

Yes, you're right. Joint manufacturing costs to produce X-547 should definitely be considered.

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Charlena

2 months ago

I'm not sure, I think we should also look at item V to fully understand the joint manufacturing costs.

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Francoise

2 months ago

Well, the obvious choice is B. We need to consider all the relevant costs and revenue information to make the upgrade decision, including the selling price of X-547, the variable and fixed costs of the upgrade process, and the selling price of Xylene.

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